In January, a janitor in Cincinnati received a piece of chilling news from one of her superiors, who had just met with upper management. The company, the supervisor said, was considering cutting some full-time employee hours down below 30 per week in order to avoid paying for new healthcare costs associated with Obamacare.
The janitor, who asked to be called Jennifer for fear of retaliation from management, is well into her 40s and now worries for her livelihood.
After over six years of working for ABM Industries, a company worth $4bn, she works full-time for $9.80 an hour. She says that with so many bills, including several monthly prescriptions, she often finds herself so short on money that she cannot eat satisfactorily. “I want to – I need to – work full-time” Jennifer said. She is a member of the local Service Employees International Union, which has struggled to bargain with ABM for better wages and steady hours.
“Every penny counts for me,” Jennifer said. “I’m working full-time and I’m still struggling to make ends meet. If I got cut down to 20 or 25 hours … oh my God, I would have no money to live on. I wouldn’t be able to pay my bills; I’d hardly afford to eat or pay for my medication. I’d be forced to look for another job.”
“It’s not like mom’s still here – I can’t go stay with mom any more,” Jennifer added.
Her story is not unusual. Three years after the passage of Barack Obama’s signature healthcare law, labor advocates are warning that it could have the unforeseen consequence of harming some of the very low-wage employees it seeks to aid. The legislation’s incentive scheme, they say, could cause a shift toward part-time work that extends beyond companies like Papa John’s and Darden Restaurants, which last year publicized their plans to cut employee hours to avoid costs under the new law.
Such worries are reflected in California, where the state union federation is exploring legislation to lay over the Affordable Care Act to fix the potential problem. “We’re extremely concerned about the structure of employer responsibility penalties under this law” says Sara Flocks, Public Policy Coordinator for the California Labor Federation, which represents over 1,200 trade unions with 2.1 million members. “It encourages a shift toward a part time workforce in industries where that’s possible. In retail, entertainment, restaurants, and hotels, we’ll see a move toward cutting workers below the 30-hour mark.”
Most at risk of this, according to Flocks, is the so-called contingent workforce: those employees with already fluctuating hours, no job security, and little power to bargain with management. These are the workers whose hours can most easily be slashed by employers seeking to avoid paying health insurance.
Under the law that takes effect next year, large employers are exempted from contributing anything towards healthcare costs of employees who work under 30 hours a week. For full-time workers, companies must offer affordable insurance or face steep fines. Employers seeking to dodge this responsibility could impose 29-hour ceiling on workers, Flocks says, and push many onto public insurance subsidies, straining state and federal budgets.
The California Labor Federation has been quietly exploring strategies to stop this potential unintended consequence by reinforcing the ACA with state legislation to discourage large employers from cutting hours. The details of this proposal are undecided, but, at least in theory, a state law acting alongside the ACA could ensure that an employer’s part-time workers are counted toward determining how much a company must contribute to overall healthcare costs. This could eliminate the incentive to skirt the law by cutting hours.
A problem that would be solved if healthcare for adults was simply free, paid for by the government through taxes.